Shares of used vehicle retailer CarMax Inc. (NYSE:KMX) fell in Wednesday trading, despite the company reporting upbeat second-quarter results.
Here are some key analyst takeaways:
- RBC Capital Markets analyst Steven Shemesh reiterated a Sector Perform rating, while raising the price target from $45 to $56.
- Truist Securities analyst Scot Ciccarelli reiterated a Hold rating, while lifting the price target from $50 to $60.
Check out other analyst stock ratings.
RBC Capital Markets: CarMax delivered "another strong quarter with comp momentum, strong flow-through, and the resumption of share repurchases increasing our confidence in business trajectory," Shemesh wrote in a note. The company reported retail comp unit growth of 13% year-on-year, significantly higher than consensus of 5.1%, he added.
Retail GPU (gross profit per unit) declined only around 5% year-on-year to $2,105, coming in higher than consensus of $2,043, "putting the company on pace to over-deliver on initial guidance for a $200 reduction in annual GPU," the analyst wrote. He raised the following estimates for the third quarter:
- Retail comp unit growth – from 5% to 15%
- Total company net sales growth – from 3% to 15%
- Adjusted earnings from 34 cents per share to 58 cents per share
Truist Securities: CarMax reported used vehicle comps at a higher-than-expected 13%, with investments in price and customer experience appearing to pay off, Ciccarelli said. While the company invested in price, the Federal Trade Commission forced many competitors to raise their advertised prices, he added.
CarMax also generated better-than-expected GPUs, aided by a sharp reduction in reconditioning costs, the analyst noted. Despite a decline in web traffic, customer engagement and conversion drove the company’s second-quarter results, he further stated.
Truist Securities raised its earnings estimates for 2026 and 2027 from $2.85 per share to $3.25 per share and from $3.45 per share to $3.80 per share, respectively.
KMX Stock Price Activity: CarMax shares are trading lower by 4.85% at $56.36 at the time of publication on Wednesday, according to Benzinga Pro data.
Photo: Shutterstock